BIM’s Q1 2020 results presentation has revealed that the company has opened up 9 stores in Morocco in Q1 2020 and that its improved profitability is approaching target. The company is sticking to its plan of opening no new stores in 2020 in Egypt, focusing instead on improving sales growth.

At the end of Q1 2020, BIM had 826 stores across Morocco and Egypt. 320 of these are in Egypt, while 506 are in Morocco. At the end of Q1 2019, the company had 757 stores in its two African markets – it has added 69 stores in the past 12 months, an increase of 9.1%. This compares to the group’s store opening growth rate of 12.3% in Turkey.

It points to a hesitation on BIM’s part around profitability. In Morocco, net income has improved and EBITDA margin almost reached BIM general targets. However, as Trendtype reported in February, BIM is facing political pressure from the Moroccan government, ostensibly over its purchasing policy.

The main issue is growth and profitability in Egypt, where store openings have slowed dramatically. Having entered Egypt in 2014, BIM had opened 256 stores by August 2017. It currently has 320 stores, an uplift in the past 3 years of just 64 stores. At the start of 2019, the company had 300 stores in Egypt, adding just 20 stores that year. By contrast it added 55 stores in Morocco in 2019.

BIM has said that it wants to increase the efficiency of its existing stores in Egypt. In its Q4 2019 update, BIM revealed that life-for-like sales in Morocco were up 8.5%. In Egypt they had risen by just 2.5%. Another key difference was the share of sales accounted for by private label: 27% in Morocco, but just 11% in Egypt.

Across all its stores, BIM has said that COVID-19 is having an impact: driving down footfall, but increasing basket size significantly. In Egypt the company has reported that the pandemic has driven sales up – we think as consumers have sought to cut down the number of shopping trips they make and also visit stores with wider aisles (to improve social distancing).

It is also notable that the pandemic has accelerated the introduction of online retail in BIM’s premium banner, FiLE. However, online retail is still only in the planning phase. Although FiLE stores are only in Turkey at the moment, we see this as an important development for Egypt especially. In Egypt, rival Carrefour has introduced an online store and the channel is small, but high growth for grocery.